Freebie? I wouldn’t bet on it

The Federal Court has found that Bet365’s Australian and UK companies (Hillside (Australia New Media) Pty Ltd and Hillside (Shared Services) Ltd) engaged in misleading or deceptive conduct and made false representations concerning promotions relating to “Free Bets” for new customers over a 10 month period in 2013 and 2014.

Useful guidance

This decision provides useful and detailed guidance about the practical application of the misleading conduct prohibition in the Australian Consumer Law to internet advertising. Specifically, the Federal Court makes it clear that businesses should not use absolute terms such as “free” to promote an offer when important conditions are not prominently and proximately identified. At a minimum, consumers should always be clearly directed to the full terms and conditions on the same webpage as an offer, although sometimes this will not be enough where the claim is so compelling and absolute and the terms contradict this.

The Federal Court noted that the physical layout of a webpage is important when taking into account whether it is likely to mislead consumers. For example, Justice Beach noted:

different colours and backgrounds can have different influences, as some may have the tendency to diminish significance or to make information unattractive to read;

different font sizes can influence how a reader prioritises information (eg. more significance may be given to larger sizes);

the layout of the page and how it displays information is important, in terms of the significance and prominence it attaches to different information; and

visual images may distract the reader’s eye away from the writing.

Whether a person has entered into contractual relations is irrelevant to an assessment of whether conduct is misleading. For this reason the fact that consumers may subsequently find out the true nature of the offer and their obligations, after they have become customers, does not excuse or save the original representation. In this case, it did not matter that customers received a welcome email from Bet365 after they had signed up for the “free bets” offer, which included qualifying information.

The ACCC has made it publicly known that it will continue to take action where it thinks customers are being misled, especially in emerging markets where there are potentially vulnerable consumers, such as inexperienced gamblers and young people.

$200 “free” bets offer

Bet365 conducted a promotional offer headlined “$200 FREE BETS FOR NEW CUSTOMERS” on its homepage (www.bet365.com.au) as well as in advertisements on a third party advertising network. From March 2013 to January 2014, first time users were directed to an opening page that displayed this headline in large yellow print.

The ACCC argued, and the Federal Court agreed, that the advertising conveyed the dominant message that new customers were entitled to $200 of free bets, without limitation or restriction. In fact, important conditions applied, including that:

the customer had to pay a deposit and risk that deposit before being entitled to make any “free” bet;

the customer had to risk the value of their deposit and the amount of the “free” bet 3 times prior to making a withdrawal (meaning a consumer who made an initial deposit of $200 and received $200 in bets was required to then gamble $1,200 before being able to withdraw any money); and

the value of the free bet was limited by the size of the customer’s first deposit.

These conditions were not displayed on the webpage advertising the offer nor did these pages provide any direct link to the terms and conditions. To access the full terms and conditions, customers needed to investigate a series of optional click-through hyperlinks to other webpages.

The “free bets” offer was accompanied by an asterisk on the opening page, however there was no further information on that page linked to the asterisk.

As such, Justice Beach found that the dominant message portrayed by the relevant advertising was that consumers could get $200 in free bets but that this was misleading and contained a false representation. The Court considered that the “free bets” claim was not appropriately and proportionately qualified by the applicable terms and conditions given their relative obscurity. His Honour highlighted that not only new users of online betting services would have been affected or likely to have been affected by the advertising, but also some existing customers who may have previously used such services of other providers.

His Honour stressed that misleading or deceptive conduct may not be corrected by any obscure fine print that sets out its true position.

Justice Beach agreed with the ACCC’s description that Bet365’s digital pathway through to the terms and conditions was “complicated and problematic”, misleading customers as to the existence, or at least the ambit and significance, of the terms and conditions. Although at some point, customers could get access to the full terms and therefore the mechanics of how the offer worked, the Court considered that this was ineffective as customers were already “enticed” into Bet365’s “marketing web” on false pretences based on the original “free bets” claim.

Up to $200 “deposit bonus”

However, Justice Beach did not agree with the ACCC’s claim that a later promotion offered by Bet365 from 30 January to 8 August 2014 was misleading, where first time visitors were directed to an opening webpage headlined “UP TO $200 DEPOSIT BONUS FOR NEW CUSTOMERS”. Justice Beach noted that customers were more likely to understand that a bonus may have conditions attached, as the term “bonus” is more nuanced that the term “free”.

His Honour found there was nothing misleading or deceptive in this message, nor was it a false representation. In any event, Justice Beach found that the dominant message was appropriately qualified by terms and conditions, which were adequately displayed on the same webpage and could be viewed in full by manually scrolling down the page. Further, a “view terms and conditions” link appeared in small, yellow font directly below the headline at the top of the opening webpage.